Safe Online Shopping: Buyer Beware
By Michele Blandino
Shopping via the Internet used to be a fairly uncomplicated matter. All you needed to do was log into your favorite retailer's website, make your selections and pay. The only difficult part was making sure the retailer's site was secure.
Recently, however, there has been an enormous increase in the number of websites that claim they can help you do a multitude of things such as buy savings bonds and save toward your children's education while you shop. And, while on the surface these seem like terrific deals, a little investigation proves that many of these sites aren't all they are cracked up to be.
How it Works
These sites all work basically in the same way. Users create accounts at one (or more) of the hundreds of websites that participate in cash-back or savings programs. In most cases, in order to qualify for any "rewards" you will need to log into the main site where you will find links to the participating retailers. Then, you shop as you normally would and pay for your merchandise. A percentage of your purchase will be put into an account where, depending on the type of program you are enrolled in, it will accrue and be paid out to you via check or be directed into an education savings plan.
That's right - an education savings plan. There are many companies - Upromise is one of the most popular - that boasts its ability to help you pay for your child's college education while you shop by directing a portion of your purchases made from participating merchants into a Section 529 plan which can be used to offset qualifying education costs.
What's the Catch?
Sounds too good to be true? In many cases, it is.
In the case of Upromise, benefits are received only on the first $30,000 spent in a given calendar year. Assume that the average benefit is 5%; this means that the most you will earn is $1,500. Now, most people wouldn't mind being given $1,500 per year to put toward their children's college education - however how many people actually make $30,000 in credit card purchases dring a year? Say your credit card purchases are a more reasonable $10,000 - the benefit falls to $500.
Another complication is in the benefits earned for grocery purchases; rather than earning credit for your entire grocery bill, only certain products qualify. In the end, it will be up to you to decide whether the extra time needed to seek out qualifying products will be worth the potential reward.
And in some cases, such as Baby Mint and FutureTrust, you will need to get a specially issued credit card in order to participate.
Another example can be found in edexpress.com. This site boasts higher return rates - and in some cases, the returns are indeed higher - however, to qualify for these higher returns, you need to pay a $24.95 annual membership fee.
Should You Enroll?
Whether or not you would benefit from enrolling in one of these types of savings programs is largely a matter of personal preference. In the end, as long as you don't pay a membership fee, don't need a special credit card and understand that you will probably only accrue a few hundred dollars per year, you probably have nothing to lose.
Where to Look
Here are a few programs that appear to be among the most legitimate: